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Questioning the Great Massachusetts Biotechnology Giveaway

This coming Monday, Governor Deval Patrick will put ink to paper on a 10 year $1 billion deal that can justifiably be called a giveaway to the biotechnology industry - right before jetting off to a huge biotech conference in San Diego. Rushed into immediate effect as an "emergency law," the influx of cash is billed as helping to create new jobs in a growing economic sector, plus incubating new businesses and maintaining the state's reputation as a research innovator.

While the "Massachusetts Life Sciences Initiative" may well take steps towards those last two rather vague goals, the idea that the giveaway will help average Massachusetts residents survive the ongoing economic storm by creating new jobs is certainly questionable.

Before looking at that issue, it's important to understand what the new law will do. Half of the billion dollars will go to building new biotech related facilities - including business parks and roadway improvements around the state and research centers at several campuses (most going to new centers at all 5 UMass campuses).

Another quarter billion will go to grants and other direct funding mechanisms to benefit both non-profits and corporations (with an earmark for grants for graduate students). And the final quarter billion will go to 9 tax credits for corporations that are "certified" by the Massachusetts Life Sciences Center - a public-private agency created by the legislature in 2006.

The Center has been run heretofore by a 5-person board - made up of biotechnology industry leaders and state officials. Notably, Jack Wilson, president of the UMass system. Under the new law, that board will be expanded to 7 seats.

And thus we arrive at the first problem with the law. None of those seats will be held by labor leaders. So how can an initiative that is supposed to help create new jobs in Massachusetts move forward without significant representation from unions? Labor will have some seats on the boards of some of the new research centers created by the law. But no oversight over the initiative as a whole. And how about representation from non-profit community organizations from one or more of the many economically disenfranchised areas of the Commonwealth? Not even on the radar screen, we suppose.

That said, what kind of jobs is the law going to create? The jobs most focused on by legislators and lobbyists have been the science and technology positions that will be created. But those will not make up the bulk of the new jobs. And such money as is made by such highly skilled and highly mobile workers will not be spent in the communities that most need it. Nor are such workers necessarily going to stay in Massachusetts for the long-term any more than many of them are from here to begin with.

Some jobs early on will be construction jobs that are mandated by the new law to pay prevailing wage and only use union workers. This is a testament to the continued political muscle of the building trades unions, and more power to them. While this publication will always encourage the trades to avoid taking morally or politically reprehensible contracts, we can't fault them for their success.

Many of the jobs will be various kinds of service jobs. Some will also likely be light industrial jobs as new biotechnology products are brought to market. There is no provision for any of those kinds of jobs to be unionized or to pay prevailing or living wages. So overall, it seems Massachusetts is once again in the business of subsidizing the creation of lousy jobs.

And how many jobs will be created? We don't know. We can assume that will be determined on a company by company basis as they apply for certification with the MLSC. But how real will those job creation numbers be? If past experience is any guide, not very real at all.

And how are the jobs going to be created? By the estimable and thoroughly debunked neoliberal strategy of giving tax breaks and free infrastructure improvements to corporations in exchange for siting their businesses here in the Bay State. This after past giveaways to high tech industries resulted in disasters like Raytheon's much-ballyhooed promise to create 5000 jobs in exchange for huge tax breaks - only to shut down most of their operation in Massachusetts within a few years. And the knowledge from experience that today's hot industry is tomorrow's has-been.

The issue of "clawbacks" (the state taking back tax breaks and other giveaways) is never even mentioned in the glowing press coverage of the initiative, and perhaps the reason there are clawbacks in the new law at all is a result of previous debacles. But the clawbacks are minor and they are not targeted to job creation benchmarks.

Rather they are linked to whether the state's return on investment in a given company is higher than 70 percent a year. If a company doesn't meet that target for two years running they can have their "certification" revoked and be liable for any tax breaks or capital infusions given to them under the law. But how precisely the state government is going to determine that is quite unclear. And it leaves plenty of room for books-cooking by the companies. Not to mention a variety of ways for corporations to decamp from Massachusetts without losing their tax breaks.

We can also question whether building new biotechnology research complexes at state universities is really such a bright idea. The UMass system (and the public higher education system in general) is in desperate need of upgrades for virtually all of its facilities. Is there really a good argument for putting hundreds of millions of dollars into building life sciences facilities that will have their research agendas heavily influenced by locally-based corporations? We think not.

Far better to put the whole billion dollars into the public higher education system and gear it towards lowering costs for all students, and improving existing facilities. Now that would be an investment in the future.

Or if it's job creation that the state is after, then why not use the money to fund the creation of a solid number of good unionized public sector jobs. Putting real money in real working people's pockets would go a much longer way towards keep the state economy stable than creating a system that throws good money after bad - and provide numerous ways for a variety of corporate hucksters and con artists to extract much of the initiative's cash long before a single job is created. In a sector that, after all, currently only employs 77,000 workers out of over 3 million.

Unfortunately, the deed is done. The law is passed. At this point, the best that labor and higher education advocates can do is watch how the initiative unfolds like hawks, and push hard to make sure that good jobs are created, and that honest unbiased research is done in the new campus facilities. Perhaps opportunities can be created to add clawbacks with teeth and make other improvements in the years to come.

We'll save discussion of the many environmental and ethical issues raised by biotechnology research for future exploration in these pages.